Ader Bullish on Casino Stocks, Including Las Vegas Sands

Posted on: December 1, 2021, 09:53h. 

Last updated on: December 1, 2021, 11:47h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The VanEck Vectors Gaming ETF (NYSEARCA:BJK) lost 15.4 percent in November and is 25.43 percent below its 52-week high, confirming casino stocks are getting shellacked. But at least one well-known investor sees buying opportunities in the group.

Many members of the gaming equity complex were flailing prior to the arrival of the omicron variant of the coronavirus. But the new strain is sapping leisure travel and stocks, giving investors a reason to depart the group. SpringOwl Asset Management CEO Jason Ader compares the omicron scenario to the late 2020 emergence of the delta variant, noting periods of panic are where investors can make money.

It’s always in the period where people are most concerned where you make the most as an investor,” he said an interview with CNBC. “It may not happen as quickly as the bulls had hoped, but it’s coming. And the pullback in the stock prices certainly represents an interesting opportunity right now.”

Ader favors casino stocks among the battered travel and leisure group.

Preference for Macau Names

The combination of previously lingering travel restrictions, regulatory fears, and the omicron variant are a toxic cocktail for Macau operators. But Ader sees opportunity in that group. He highlights Las Vegas Sands (NYSE:LVS) as his preferred Macau idea.

“That’s at the top of my list right now of companies that have been affected right now by travel and tourism,” said the SpringOwl boss in the CNBC interview. “I think we’ll look back in a few years and wish we’d bought more.”

Shares of the largest Macau operator are off 40.23 percent year-to-date and reside at the lowest levels since early 2020.

While Macau’s 2022 GGR is slated to be well off pre-pandemic levels, the silver lining for Sands is that JPMorgan is forecasting a 70 percent recovery in the mass market segment — LVS’s core constituency in Macau. Additionally, some well-known investors are stepping into LVS shares as of late.

Ader was a Sands board member from 2009 to 2016.

Bold Call on Casino Stocks

Some gaming equities, namely regional operators and companies with Las Vegas Strip exposure, are performing admirably on a year-to-date basis. But the broader complex was scuffling prior to the omicron variant making international headlines.

Last week, Charlie Bilello, chief executive officer of Compound Capital Advisors, posted a list of stocks that, as of Nov. 26, were at least 50 percent below 2021 highs. That group features multiple gaming stocks, including DraftKings (NASDAQ:DKNG), Playtika (NASDAQ:PLTK), Penn National Gaming (NASDAQ:PENN) and Skillz (NYSE:SKLZ).